I am president of Ventureneer, a digital media and market research company that helps corporations reach small businesses through thought leadership. My book, Forget the Glass Ceiling: Build Your Business Without One, provides women entrepreneurs practical advice for overcoming the barrier they face. I was named a 2012 and 2013 Small Business Influencer for my articles about the success factors of women entrepreneurs. Follow me on Google and Twitter

Can Crowdfunding Live Up To Its Potential for Women Entrepreneurs?

Recently I wrote about a new funding source for entrepreneurs: crowdfunding. Right now, small businesses can raise money from the online crowd in exchange for a give-away, such as a product or service, or from accredited investors. Hopefully sometime in 2013 the rules and guidelines for the Jumpstart Our Business Startups (JOBS) Act should be approved, which will allow companies to give equity to crowdfunding investors in the U.S.

I was optimistic that this new funding tool would be used by women entrepreneurs to raise money. After all, women are great collaborators and communicators, both necessary skills if you are going to succeed at crowdfunding.

However, I was struck by the proverbial thunderbolt, when I read Women, Finance the World You Want by Whitney Johnson. One female social entrepreneur she interviewed from Fast Company’s League of Extraordinary Women chose to be a nonprofit rather than a for-profit because she felt women were willing to donate freely to her cause, but would not invest in it as a business. “When you donate, you are giving something. When you invest, you can expect a return,” writes Johnson.

What’s up with that? Women have money to give away but not to invest? In the world of social good, a socially responsible enterprise provides a return while making the world a better place. Some women realize that and are educating themselves to assess investments rather than give their money away.

Trust is another important component for women. Whether they are looking for money or providing it. “Women can be great contributors to crowdfunding other women entrepreneurs, but in order to make this a viable force for funding, women need to access through trusted sources,” said Kay Koplovitz, Chairman, Springboard Enterprises (sources, coaches, showcases and supports women-led growth companies seeking equity capital) and Founder, USA Networks.

A twist on crowdfunding women-owned businesses is Bad Girl Ventures and and SoMoLend, microfinance organizations, which raise donations to fund the best women entrepreneurs in Ohio. They train women entrepreneurs who then compete for a $25,000 low interest loan.

With crowdfunding equity investment on the horizon, how can women entrepreneurs best tap the crowd? What’s needed to get women to invest in other women?

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Thank you for the great piece on an important issue, Geri. We are already seeing equity based crowdfunding work well for women led businesses, and investors. Since launching in April, over 60% of the businesses funded on CircleUp, have a woman CEO – nearly 5x the VC industry average. All of our investments have women Angels involved, also at higher rates than they have participated historically. Crowdfunding is expanding participation in the market already – and it is only the very early days for the industry overall.

If I had $10 for every person who said to me “Why aren’t you a non profit? People would give you money if you were.”, my business would be completely funded. For profit should be the goal, particularly in this economy. Would we expect the Johnson brothers to go the non-profit route today if they were just launching J & J wound care products to help combat the spread of infection? Not.

As a female entrepreneur, I would love to see women lead the way in helping the world and themselves financially. Somewhere out there is a grandmother who can’t stand the world she is leaving to her grandchildren and wants to do something productive about it. What could be a more lasting legacy than underwriting a commercial solution to one of the many problems that ail us as a country. Grandma, if you are reading this, I have a business for you.

Nice piece! I recently hosted an event in NYC called, Women Transforming Our Financial Markets Symposium, focusing on this very subject. With new crowdfunding legislation destined to democratize the financial markets and allow capital to flow back to entrepreneurs and retail investors, there has never been a more favorable climate for America’s women to start businesses and maximize investment returns. Here’s the recap: http://eepurl.com/tvoxH

Great article and the answer (to the title question) is yes! Women are great collaborators and inherently want to support other women and good causes. I also strongly believe that all women have an “inner entrepreneur” in them, but are often lacking the confidence and access to proper resources to do something with it. It is to harness these inherent qualities in all women that I am launching Samiti.Co – an experimental incubator program (a for-profit business!) that will serve as a platform for women in local communities to collaboratively start, own, fund and operate businesses.

I have a campaign on Indiegogo @ http://igg.me/p/308899/x/886038 and I have not had any success. I have posted on facebook, twitter, google, and linkedin. I have even asked people to review my campaign to see what I am doing wrong and still have not received a response. What am I doing wrong?

Shannon, you need to look trustworthy. The best way to show that others already trust you is by showing that others are already supporting your crowdfunding campaign. Before you launch your campaign, line up commitments from friends and family so on day one you look successful.

In order to be successful in online fundraising, you need to have social media juice — lots of Facebook fans, Twitter followers, LinkedIn connections and email subscribers so your message can go viral, according Cohen. These online connections already know you, trust you, and are more likely than strangers to invest in what you’re doing. They’ll also help you with outreach by spreading the word about what you’re doing to their connections.